7-Inch Tablets Gobbling Up Market Share

Seven-inch tablets are rapidly gaining favor with consumers, and that could put Apple in a pickle. Its 10-inch iPad is currently the leader in the tablet segment, hands down. However, if Apple debuts a smaller version to compete with Amazon's Kindle Fire and Google's Nexus 7, as expected, the result could be cannibalization of its larger, more expensive, and presumably more profitable model.

The media tablet market is poised for robust growth -- driven in large part by the emerging 7.x-inch form factor, according to new figures from
IHS iSuppli.

Tablet shipments will reach 126.6 million units this year, the firm predicted, which amounts to a 56 percent annual increase.

The largest portion of the market is the 9.x-inch segment, iSuppli said. However, the 7.x-inch tablet could wind up eroding a significant share of the 9.x-inch tablet market.

iSuppli is not the only one tracking this trend.

"We have seen very strong growth in the 7-inch-sized tablet, and it is a trend that we think is very important to the industry," IDC analyst Bob O'Donnell told the E-Commerce Times.

It is still smaller as a percentage of the total market, but it is clearly the fastest-growing segment, he said. "Will it become the dominant size in the tablet market? No, we don't think so -- but we do believe it will get very close."

Gaining Fast

For the moment, the 9.x-inch tablet market is the dominant one by far. Currently, approximately 74.3 million units, or 59 percent of all tablet display panel shipments are expected to be 9.x-inch models, iSuppli said. These tablet shipments are forecast to rise 35 percent this year, from 55.2 million units in 2011.

But the 7.x-inch tablet market is gaining fast. Shipments will amount to 41.1 million units this year, nearly double from 20.8 million units in 2011. Put another way, the 7.x-inch category will control 32 percent of the tablet display space this year, compared with 26 percent last year.

Giving Up Market Share

Already, the 9.x-inch sector is giving up some market share in the face of growth this year, iSuppli said. The trend will accelerate as more of the lower-priced, smaller tablets come to market, including a widely anticipated 7.x-inch tablet from Apple.

There are, in fact, a lot of drivers behind the growth of the 7.x-inch tablet's share, with Apple's expected entry just one factor, Charles King, principal analyst with Pund-IT, told the E-Commerce Times.

The 7.x-inch tablet hits a sweet spot for a lot of consumers, he said: It is small enough that it doesn't turn into a substitute for a laptop, which means it is easy to toss into a briefcase or purse. But it is larger than a smartphone and thus more attractive as a media consumption device.

"The 9-inch and 10-inch tablets are large enough that most people will make a choice to leave it or a laptop behind because it is too much to carry," King pointed out.

Apple's Problem

This dynamic will be a tricky one for Apple to navigate when it launches its 7-inch tablet, King continued.

"One of the reasons why the iPad was so successful was that the company was careful to make sure it did not overlap or erode sales of its standard Mac notebooks," he said. It was able to do that by keeping the operating systems and app ecosystems of the respective products entirely separate.

The question is, will Apple be able to keep its 7-inch tablet from cannibalizing the 10-inch? "It is a real danger, and it may be the reason why Apple has been resisting a smaller tablet," speculated King. "It is leery of putting out a similar device which is less money than the traditional iPad but still a better user experience than the iPhone."